Actors can be employees or entrepreneurs.

  • If actors are to be classified as dependent employees (salaried employees) and must be employed, their services are not subject to VAT.[1]
  • However, if actors are self-employed entrepreneurs and their previous year’s turnover (not profit) exceeds EUR 17,500.00, they must pay VAT. The same applies to companies that conclude contracts with actors based abroad (reverse charge procedure, Section 13 b UStG).

However, VAT law provides for various exceptions. Gem. § Section 4 no. 20 a UStG stipulates that sales by certain public institutions that perform cultural tasks such as theaters, orchestras, etc. are exempt from VAT. Cultural authorities of the federal states can certify so-called similar institutions that they also perform cultural tasks. As a result, they do not have to pay VAT either.

However, it is questionable who is a “similar establishment”, in particular whether actors are also “similar establishments” within the meaning of the provision, and whether authorities can issue these actors with a corresponding certificate, with the result that the tax office usually determines that they do not have to pay VAT either.

The question now seems to have been clarified in practice. Many of the competent cultural authorities certify that individual artists can also be “similar institutions”. However, the path to this led through several court decisions. This includes, in particular, a ruling by the EUGH of 3. 4. 2003 – C-144/00. The ECJ stated the following with regard to the European regulations, which are only implemented in German VAT law:

  • Soloists may provide cultural services within the meaning of the provision of Article 13, Part A, para. 1(n) of the Sixth Directive and may therefore be similar entities. [2]

However, the ECJ only ruled on an individual case. It was not clear from his judgment who fulfilled the requirements of a soloist. Was the ECJ concerned with soloists who hold an outstanding artistic position? Or did the ECJ also extend the exception to individual artists who did not have a prominent position equivalent to that of a classical soloist?

The Federal Ministry of Finance took up the ECJ ruling in its letter dated July 31, 2003. It stated that the performance of individual artists can also fall under the exception of sec. 4 no. 20 a UStG.[3] However, the Federal Ministry of Finance did not differentiate in the letter between individual artists who have a solo performance and those who do not have a correspondingly prominent position.

The BFH has answered this discussion, at least for the music sector, in its ruling of 18.02.2010 – V R 28/09. In the case decided by the BFH, the orchestra had received a certificate in accordance with Section 4 no. 20 a UStG on which the names of the individual orchestra musicians were listed. The individual orchestra musicians did not have a separate certificate issued to them personally in accordance with Section 4 No. 20 a UStG. The court stated that

  • orchestra musicians provide cultural services to the orchestra in the field of orchestral music. The services provided by the orchestras are cultural services pursuant to Art. § Section 4 no. 20 letter a sentence 1 UStG. According to the case law of the ECJ, a different VAT treatment of soloists and cultural groups cannot be justified, meaning that the services provided by individual orchestral musicians to their orchestra should also be regarded as cultural services.
  • In addition, the court rejected its case law from a ruling of the BFH of 24.02.2000 – VR 23/99, according to which two individual musicians (DUO) could not be an orchestra.

As a result of the ruling, the VAT application decree for orchestras was amended[4]:

Orchestras, chamber music ensembles and choirs include all musical and vocal groups consisting of two or more performers. Article 132 para. 1 letter n of the VAT Directive must be interpreted as meaning that the term “other recognized bodies” does not exclude soloists and conductors performing as individual artists (cf. also ECJ ruling of 3.4.2003, C-144/00, BStBl II p. 679). Accordingly, the service provided by an individual orchestral musician to the orchestra in which he works is also to be regarded as a cultural service provided by a soloist (see BFH ruling of February 18, 2010, V R 28/08, BStBl 2010 II p. 876).

The BFH has therefore interpreted the ECJ ruling to the effect that individual musicians without a prominent soloist position within an orchestra can also be similar establishments within the meaning of Section 4 no. 20a UStG. From this it can be concluded that the term “soloist” is to be understood in the sense of an individual artist and not in the sense of an artist who is particularly highlighted by a solo performance.

If this idea is transferred to the theater, individual actors (without having a solo position within a group or ensemble) must also be “similar institutions”.

However, as far as can be seen, there has not yet been a corresponding decision by the BFH. The VAT application decrees and legal literature have also not yet provided a clear answer to this question, which is so important in practice. In a ruling dated 04.05.2011 – XI R 44/08, the BFH only cited an individual artist who (alone) provides a performance aimed at an audience as an example of a “similar establishment”.[5] At the very least, it can be stated that this decision does not preclude the conclusion that individual artists – without a prominent position within a theater group or ensemble – can also be “similar institutions”.

In practice, however, the problem seems to have been largely resolved. The scope of application for actors is limited anyway. This is because they are often employed or small business owners. In the few remaining cases, the tax authorities and the cultural offices have mostly switched to exempting individual artists without a solo performance. This was expressly confirmed to the author of this article by telephone by the competent authorities of the following federal states: Baden-Württemberg; Berlin; Hamburg; Hesse; Lower Saxony; Münster; Saxony; Saxony-Anhalt; Schleswig-Holstein. There is therefore a good chance for all actors that the cultural offices of the other federal states will also decide in this direction and that the tax offices will follow this decision.

Against this background, we recommend: Actors who are self-employed entrepreneurs and whose previous year’s turnover (not profit) exceeds EUR 17,500.00 should check whether it makes sense for them to obtain a certificate in accordance with § 4 No. 20 a UStG from the competent cultural authority. If they are successful, the cultural office would confirm that they are a “similar institution” in accordance with the German Civil Code. § 4 No. 20 a UStG are. This is particularly important for contracts with artists based abroad.

Tip: The certificate can also be applied for retroactively.

[1] See the delimitation catalog, according to which actors are generally employed;

[2] Article 13(A)(1)(n): certain cultural services and closely related supplies of goods provided by bodies governed by public law or other bodies recognized by the Member State concerned;


[4] 4.20.2 UStAE